RAN warship design-change cost blow out

An audit into Australia’s largest ­warship project has exposed a dispute over whether construction contractors are building the wrong vessel.

In a response to a damning audit which found the $8.5 billion destroyer project was running two-and-a-half years late and more than $300 million over budget, the chief executive of ­shipbuilder ASC,
Steve Ludlam
, said Spanish designer Navantia has demanded so many design changes it is building a more modern and powerful warship than the one envisaged by the Howard government when the ­contract was signed in 2007.

The Spanish shipbuilder was criticised in an Australian National Audit Office report on Thursday for providing poor design drawings to shipyards – including ASC – involved in the project to build three 6500 tonne destroyers for the RAN, which contributed to ­substantial rework on the ships and cost blowouts and delays.

ASC is a partner in the Adelaide-based Air Warfare Destroyer Alliance which includes US systems integrator Raytheon and the government ­weapons purchaser, the Defence Materiel Organisation.

Mr Ludlam said while the original contract laid out the “design baseline as the F-104 [guided missile frigate], it is ASC’s view that the alliance is being delivered a production design derived from the F-105’’.

“The F-105 has evolved from the much earlier F-104 design and as a result significant additional design risk is being driven in to the air warfare destroyer program due to the extensive nature of the design evolution from the F-104 to the F-105,’’ he said.

The F-105 is a 2007 version of the Spanish guided-missile destroyer which costs up to $500 million more and includes upgrades to improve its range, speed, fire power and sonar ­systems over the F-104, which was launched in 2004.

Mr Ludlam said the difference is ­crucial to the success of the project given the earlier F-100 and F104 designs were already working and proven at sea, meaning building them should be easier and involve less risk.

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“The reality of the engineering effort required throughout the program has differed greatly from ASC’s expectations and the risks associated with the design-and-build strategy were underestimated in 2007,’’ Mr Ludlam said.

“This has manifested itself as ­substantial rework driven by design immaturity issues, which run across many aspects of the air warfare destroyer program which have caused considerable cost and delay.’’

Navantia insisted in a response to the audit that Australia is building the ship ordered in 2007.

“The design of the Australian Air Warfare Destroyer is very different from that of the existing F-104, incorporating the lessons learned from the Spanish Navy’s F-105 which were not all known at the time of the contract,’’ ­Navantia said.

Navantia said it was complying with Australian contract requirements for the three warships and ensuring the fleet is updated to counter concerns over obsolescence.

“All these items, together with the supply chain information modifications in respect to F-104 equipment, imply a very relevant number of ­revisions and modifications to the ­existing F-104 design,’’ it says.

Navantia said the quality of its ­drawing was good enough for ­experienced shipyards but clearly ­inexperienced Australian shipyards were not up to the task. In blaming Australian-sought equipment modifications for much of its design revisions, the Spanish company argued its ­performance was “very satisfactory".

“Navantia is fully convinced that the major driver of cost over-runs and delays has not been the number of ­modifications or revisions," it said.

“Rather it has been deficiencies in the process and management of such issues, which in an experienced ­shipyard would have had a relatively small impact.’’